The Senate Bill and the States

In my post of November 16, Returning to the Articles of Confederation, I compared the position that I expected the Senate bill to take on the role of the states in implementing health reform unfavorably to the approach taken by the House bill. The language of the Senate bill is now available, and, unfortunately, it takes the approach that I predicted it would. (My full analysis of the Senate bill is found at www.healthaffairs.org/blog).

The immediate addressee of most of the provisions of Title I of the Senate bill, “Quality, Affordable Health Care for All Americans,” is the “Secretary,” by which is meant the Secretary of Health and Human Services. The House bill creates a new federal agency, the Health Choices Administration, whose Commissioner is primarily responsible for implementing the legislation. The Senate bill, by contrast, calls on existing federal agencies to implement the bill, primarily HHS, but also the Department of the Treasury, which would implement the excise taxes imposed by the bill’s individual and employer mandates; the Department of Labor, which assists with the implementation of the provisions of the bill dealing with employment-related health plans; and the Department of Homeland Security, which helps to ensure that unauthorized aliens do not in any way benefit from the legislation.

But the primary responsibility of HHS under the new legislation is to draft the regulations, standards, and guidelines needed to implement the legislation. This is often to be done in consultation with the National Association of Insurance Commissioners (NAIC), the states, or special advisory groups created to implement particular provisions, like the CO-OP and public option sections.

The real job of implementing and enforcing the law is left to the states. With few exceptions, the federal government has limited responsibility for the direct implementation and enforcement of the statute. Most of the insurance reform provisions of the Senate bill are created through amendments to the Health Insurance Portability and Accountability Act of 1996 (HIPPA), as it is found in title XXVII of the Public Health Service Act. Under HIPAA’s enforcement provisions (found at 42 U.S.C. §300gg-22), responsibility for enforcing the law against insurers rests in the first instance with the states. Only if HHS determines that a state has substantially failed to implement the reforms, may HHS step in and enforce the law directly. This approach to enforcement is reinforced by section 1321 of HR 3590, which reiterates that the states are primarily responsible for enforcing the insurance reforms, and only if they have not taken steps to enforce the law by January 1 of 2014, can HHS enforce the laws directly,

The states are also responsible for establishing exchanges or for cooperating with other states in establishing regional exchanges. Only if a state fails to do so by 2014 can HHS either directly or through a non-profit entity establish and operate an exchange. The only major responsibility assigned to the federal government by the legislation (other than drafting regulations, standards, and guidelines) is to make eligibility determinations for premium and cost-sharing tax credits and to handle appeals of those determinations, but even here the applications are handled in the first instance by the states or exchanges and the federal government’s role will be largely invisible.

As I noted in my earlier post, our experience with implementing the HIPAA individual reforms and with Medicaid should give us pause in pursuing this route. The Senate approach puts the federal government in the very awkward position of regulating the states, which in turn must regulate insurers. Some states will implement the law enthusiastically, but a number of states have already indicated their lack of support for reform. Depending on the states to get the job of reform done risks implementation delays. In some states the reforms may not be implemented at all. Unless an administration is in place in 2014 that is deeply committed to pushing recalcitrant states aside and taking direct action, it is likely that the reforms may never be implemented adequately throughout the country.

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The views reflected in this blog are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.